Written Answers Nos. 98-107
98. Deputy Mick Wallace asked the Minister for Finance if he will provide details of the discussions he participated in as part of the recent Bilderberg meeting; for information on any agreements or decisions reached; and if he will make a statement on the matter. [17398/16]
View answerI attended the Bilderberg meeting from 10-12 June 2016 in Dresden, Germany. I, like a number of European ministers, was invited to attend given my position as Minister for Finance. For further information, I would point the deputy to the Bilderberg Meetings website (www.bilderbergmeetings.org) which includes information on the organisation's governance, steering committee, meetings, attendees, agendas and associated press releases. At this meeting and its workshops I took the opportunity to set out to my fellow attendees the opportunities that exist in Ireland for investors and multinational companies.
The Government is focused on encouraging and supporting foreign direct investment into Ireland to provide jobs and continue to support economic growth. In January of this year, the IDA announced the highest level of employment in its client companies in its 67 year history. IDA client companies created 18,983 new jobs in 2015. These results mean that more than one-in-five private sector jobs in the economy are as a result of government supported FDI. I would point out to the Deputy that a number of the business attendees represented companies which have very significant investments in Ireland that support thousands of Irish jobs.
99. Deputy Mick Wallace asked the Minister for Finance the total cost of his trip to the Bilderberg meetings, including details of all expenses and per diem of any accompanying staff; if this is paid by the State; and if he will make a statement on the matter. [17399/16]
View answerAs the Deputy may be aware, I recently attended a number of meetings in Germany. The first of these was with my German counterpart, Minister Wolfgang Schäuble on the 9th June to discuss general economic matters and financial services issues of mutual interest to both Ireland and Germany. I also met with Jörg Asmussen, former member of the Executive Board of the European Central Bank and former Deputy Finance Minister on the 9th June to discuss general economic matters in the wider European context.
Following these meetings I also attended the Bilderberg meeting from 10th-12th June 2016 in Dresden. I, like a number of European ministers, was invited to attend given my position as Minister for Finance. For further information, I would point the Deputy to the Bilderberg Meetings website (www.bilderbergmeetings.org) which includes information on the organisation's governance, steering committee, meetings, attendees, agendas and associated press releases. At this meeting and its workshops I took the opportunity to set out to my fellow attendees the opportunities that exist in Ireland for investors and multinational companies.
The Government is focussed on encouraging and supporting foreign direct investment into Ireland to provide jobs and continue to support economic growth. In January of this year, the IDA announced the highest level of employment in its client companies in its 67 year history. IDA client companies created 18,983 new jobs in 2015. These results mean that more than one-in-five private sector jobs in the economy are as a result of government supported FDI. I would point out to the Deputy that a number of the business attendees represented companies which have very significant investments in Ireland that support thousands of Irish jobs.
The cost of this itinerary (that includes flights, accommodation and travel & subsistence), that will be claimed in the usual way and paid for by the State, is €4,039.15 of which €304.50 is attributable to travel & subsistence expenses for my private secretary who accompanied me.
100. Deputy Pearse Doherty asked the Minister for Finance if he believes Article 114 of the Treaty of the Functioning of the European Union is the appropriate basis for the EU Commission's proposal to establish a European deposit insurance scheme; and if he will make a statement on the matter. [17400/16]
View answerNegotiations on the European Deposit Insurance Scheme have been ongoing at European Council working group since January. During those negotiations a number of Member States have queried whether Article 114 is an appropriate basis for the proposal.
The European Commission, in its function as initiator of legislation in the European Union, proposes the legal basis for European legislation. Both the Commission and Council legal services have advised that Article 114 is an appropriate legal basis for EDIS and I would agree with this advice. Despite this advice certain member states continue to have concerns with relying on Article 114.
Taking account of these concerns it was agreed at the ECOFIN meeting of Finance Ministers on 17 June that Member States would have recourse to an Inter-Governmental Agreement when political negotiations on EDIS start.
101. Deputy Pearse Doherty asked the Minister for Finance his views on how sovereign exposures at banks should be treated in terms of capital requirements in the context of the EU Commission's proposal to establish a European deposit insurance scheme; and if he will make a statement on the matter. [17401/16]
View answer102. Deputy Pearse Doherty asked the Minister for Finance his views on the need for a common backstop and whether this view is likely to prevail in the context of the EU Commission's proposal to establish a European deposit insurance scheme; and if he will make a statement on the matter. [17402/16]
View answerI propose to take Questions Nos. 101 and 102 together.
The European Commission published a proposal on a European Deposit Insurance Scheme (EDIS) in December 2015. Discussions chaired by the Dutch Presidency of the European Council have been ongoing on this issue over the past six months, culminating in a report to last week's Ecofin Council meeting
Common Backstop
At European level it had previously been agreed that a backstop to the Single Resolution Fund (SRF) will be in place at the end of the eight year transition period in 2024 and should be fiscally neutral in the medium term. Negotiations on this have yet to commence.
At the ECOFIN meeting of Finance Ministers on 17 June it was agreed that negotiations on a common backstop should start in September, providing all Member States have finalised the transposition of the Bank Recovery and Resolution Directive. The Council conclusions also leave open the possibility that the backstop could be introduced ahead of the end of the transition period. I am strongly in favour of reaching agreement on the back stop as early as possible.
Regulatory Treatment of Sovereign Exposures
The banking and financial services regulatory framework has only recently been changed following the introduction of CRD IV and further changes are impending such as the Leverage Ratio and the Net Stable Funding Ratio. In these circumstances I believe we must be cautious in our approach to the regulatory treatment of sovereign exposures. Most importantly, I believe Europe should only act in the context of a global solution to the bank sovereign debt issue. This issue was also considered at the 17 June Ecofin Council which concluded that Council should await the outcome of the Basel Committee before considering any further steps in the European context.
It is our view that completing EDIS is an important risk sharing measure. The Ecofin Council has agreed that work should continue on EDIS at a technical level and move to political level as further progress is made on Banking Union risk reduction measures.
103. Deputy Pearse Doherty asked the Minister for Finance the number of persons in debt who have engaged with StepChange regarding their mortgage debt or any other issue and how this compares with projections; and if he will make a statement on the matter. [17412/16]
View answerStepChange Debt Charity Ireland launched its telephone advice service in Ireland on November 16th last, offering free and independent help for anyone struggling with debt problems. The charity offers a range of solutions to help people deal with their whole debt problem, secured and unsecured, including informal repayment plans, mortgage restructuring and insolvency.
The Deputy will be aware that StepChange is funded via a grant agreement with Bank of Ireland, Ulster Bank, Permanent TSB, KBC Bank and Allied Irish Bank. I do not have information regarding the number of clients who have engaged with StepChange regarding their mortgage debt, nor do I have any information regarding how this compares to their projections.
104. Deputy Pearse Doherty asked the Minister for Finance the provisions in place to prevent reckless lending within the economy and the penalties in place for lenders proved to have lent recklessly; and if he will make a statement on the matter. [17414/16]
View answerThere are now a number of measures in place to protect consumer borrowers. Key among these is the Consumer Protection Code 2012 ('the Code'). The Code, which is a statutory code issued inter alia under Section 117 of the Central Bank Act 1989, sets out many important protections for borrowers in relation to the sale of products (including mortgages), by imposing 'Knowing the Consumer and Suitability' requirements on lenders. Chapter 5 of the Code contains provisions in terms of how Irish lenders must assess the affordability of credit for an individual borrower, including that the personal and financial circumstances of any consumer applying for credit must be thoroughly assessed to ensure that they are only offered a product that is suitable to their personal circumstances and which they will be able to maintain over the life-time of the product.
In particular, Provision 5.1 of the Code requires that lenders must gather and record certain information on the consumer, including:
"a) Needs and objectives including, where relevant:
i) the length of time for which the consumer wishes to hold a product,
ii) need for access to funds (including emergency funds),
iii) need for accumulation of funds.
b) Personal circumstances including, where relevant:
i) age,
ii) health,
iii) knowledge and experience of financial products,
iv) dependents,
v) employment status,
vi) known future changes to his/her circumstances.
c) Financial situation including, where relevant:
i) income,
ii) savings,
iii) financial products and other assets,
iv) debts and financial commitments.
d) where relevant, attitude to risk, in particular, the importance of capital security to the consumer.
The regulated entity is only required to seek the information set out at a) to d) above where it is relevant to the assessment of suitability to be carried out under this Chapter."
Furthermore, Provision 5.9 specifically requires lenders to carry out an assessment of affordability and consider:
"a) the information gathered under parts b) and c) of Provision 5.1; and
b) in the case of all mortgage products provided to personal consumers, the results of a test on the personal consumer's ability to repay the instalments, over the duration of the agreement, on the basis of a 2% interest rate increase, at a minimum, above the interest rate offered to the personal consumer. This test does not apply to mortgages where the interest rate is fixed for a period of five years or more."
It should be noted that where regulated entities are providing credit under credit agreements which fall within the scope of the European Communities (Consumer Credit Agreements Regulations 2010 (S.I. No. 281 of 2010) the Provisions of Chapter 5 of the Code do not apply. However, these Regulations (which transpose the EU Consumer Credit Directive) separately place an obligation on a creditor to assess the creditworthiness of a consumer borrower before entering into a credit agreement with a consumer borrower (Regulation 11). In addition, the more recent European Union (Consumer Mortgage Credit Agreements) Regulations 2016 (which transpose the EU Mortgage Credit Directive) also places an obligation on creditors - in relation to residential mortgage and other relevant credit agreements - to assess the creditworthiness of a consumer borrower and furthermore places an onus on a lender to provide credit only where the result of the creditworthiness assessment indicates that the consumer's obligations are likely to be met in the manner required under that agreement (Regulation 19). Both Regulations provide that a creditor who contravenes these provisions commits an offence and the Central Bank's Administrative Sanctions powers are also available to enforce these provisions.
More generally, the Central Bank conducts themed inspections to monitor compliance with all of its codes of conduct (including the Consumer Protection Code) and breaches of regulatory requirements are dealt with using appropriate supervisory powers, including Administrative Sanctions powers, where appropriate. Furthermore, Central Bank supervision of credit institutions includes an assessment of lending practices and the management of credit risk in the credit institutions' risk appetite and governance frameworks.
105. Deputy Pearse Doherty asked the Minister for Finance if he believes that the Registration of Titles Act was respected during the transfer of mortgage books related to the merger of banks (details supplied) and in cases where a bank left the Irish market; and if he will make a statement on the matter. [17419/16]
View answerI am advised that the Registration of Titles Act was not relevant in the case of the acquisition of EBS by AIB. EBS was transferred to AIB pursuant to an acquisition conversion scheme under the Building Societies Act and is a whole-owned subsidiary of AIB. The bank has confirmed to me that there was no transfer of mortgage books between EBS and AIB as a result of that transaction.
In relation to the transactions involving third party Institutions that have left the Irish market I do not have any information to suggest that proper procedures were not respected in the transfer of those mortgage books however as these transactions are between parties not connected with the State I do not have access to the information requested.
106. Deputy Lisa Chambers asked the Minister for Finance the number of occasions in each of the years, from 2011 to 2016 to date, in which the powers vested in him or any other Minister in his Department were exercised, without any express act of delegation, by departmental officials of certain seniority and responsibility, as per the Carltona doctrine. [17470/16]
View answerAs the Deputy may be aware, under the Ministers and Secretaries Act 1924, a number of officials in my Department are authorised to authenticate by their signature, my office seal.
Furthermore, the Public Service Management Act 1997 seeks to secure an appropriate devolution of authority and responsibility within Government Departments from Ministers to their officials. The Act provides a statutory framework for the assignment of specific functions for which the Secretary General is responsible to appropriate officers or appropriate grades of officers within departments with accountability flowing to the Secretary General for the performance of those functions. The Act reaffirmed that, notwithstanding any assignment (i.e. delegation) of functions of civil servants under the Act, a Minister of the Government is in charge of his or her Department and is responsible for the administration of that Department as provided for in the Constitution and the Ministers and Secretaries Act, confirming the primacy of the principle of ministerial responsibility.
This assignment for my Department is available at www.finance.gov.ie/who-we-are/organisation-structure/organisational-structure and is also available at www.whodoeswhat.gov.ie.
107. Deputy Kevin O'Keeffe asked the Minister for Finance when he will conduct a further review of the gift and inheritance tax-free thresholds, given the increase in property valuations. [17550/16]
View answerCapital Acquisitions Tax (CAT) is the overall title for both Gift and Inheritance Tax. The tax is charged on the amount gifted to, or inherited by, the beneficiary of the gift or inheritance.
For the purposes of CAT, the relationship between the person who provides the gift or inheritance (i.e. the disponer) and the person who receives the gift or inheritance (i.e. the beneficiary), determines the maximum life-time tax-free threshold known as the "Group threshold" below which gift or inheritance tax does not arise. There are, in all, three separate Group thresholds based on the relationship of the beneficiary to the disponer:
The Group A tax free threshold of €280,000, increased from €225,000 in Budget 2016, applies where the beneficiary is a child (including adopted child, stepchild and certain foster children) or minor child of a deceased child of the disponer. Parents also fall within this threshold where they take an inheritance of an absolute interest from a child.
The Group B tax free threshold of €30,150, applies where the beneficiary is a brother, sister, a nephew, a niece or lineal ancestor or lineal descendant of the disponer.
The Group C tax free threshold €15,075, applies in all other cases.
I raised the Group A tax-free threshold applying to gifts and inheritance from parents to their children from €225,000 to €280,000 in Budget 2016. This represented an increase of about 25%. I did this in recognition of the improving state of the public finances and of the concerns expressed to me by people making and receiving gifts and inheritances, particularly in a context of rising property prices.
I indicated at the time that I saw the change to the Group A tax- free threshold as the start of a process. The extent to which increases in the various tax-free thresholds for CAT purposes can be accommodated in the future will depend, among other things, on the continuing economic recovery and the competing choices for limited resources. The Deputy will be aware of the commitment in the Programme for a Partnership Government to work with the Oireachtas to raise the Group A CAT tax-free threshold (including all gifts and inheritances from parents to their children) to €500,000.
